Shop prices fell at their fastest rate for at least seven years last month as high street shops and supermarkets resorted to aggressive discounting to boost festive sales.
The British Retail Consortium (BRC) said overall shop prices fell by 0.8% in December, dropping for the eighth consecutive month and at the fastest pace since its survey began in December 2006.
Households were offered some respite as food price inflation slowed to its lowest level for more than three years at 1.7% while widespread discounting in the wider retail sector saw non-food prices fall by 2.3%, according to the figures from the BRC and Nielsen.
Mike Watkins, head of retail and business insight at survey partner Nielsen, said: “This will have brought a festive cheer to shoppers filling their trolleys with food and drink at supermarkets.
“With the continuation of price cuts and promotions across all of retailing and with many shoppers holding back on shopping to the last week, there will have been bargains and some great savings for the savvy Christmas shopper.”
However, plunging prices are likely to have taken their toll on many retailers, with food chains in particular expected to have seen their profits hit.
The BRC said weak sales leading up to Christmas led to more promotions than normal as retailers fought for market share.